India has pressed the pause button on all fresh free trade agreements as it is revisiting its negotiating strategy in order to have more “meticulously” planned pacts.
The idea is to avoid giving unintended concessions, check third country goods (mostly from China) coming in from partner countries, help industry gain more market access, reject stringent sustainability rules and be more balanced in terms of give and take, sources said.
“The SOPs (standard operating procedures) for the new FTA strategy are ready and a Cabinet note is being prepared by the Commerce Department. Past FTAs, including recent ones with the UAE and Australia, have been minutely studied to understand where things could have been done better and where things went wrong. New FTAs are likely to be negotiated once the SOPs are in place,” a source tracking the matter told businessline.
Negotiations are temporarily on hold even for the FTAs where talks have been initiated but are not at an advanced stage, like Peru and Chile, but could continue if approval comes from the top. However, with partners such as the UK and the EU, where talks have progressed considerably, negotiations continue.
In the last five years, India’s total imports from FTA partners (ASEAN, UAE, SAFTA, Australia, South Korea, Japan, Mauritius) increased by 37.9 per cent to $187.92 billion while its exports increased by 14.48 per cent to $122.72 billion, per an analysis done by research body Global Trade Research Initiative.
While some part of the trade was not using FTA concessions, the ASEAN countries, the UAE, Japan and the SAFTA nations appear to have gained disproportionately.
The idea behind the new strategy is to learn from past experiences. “For instance, after our experience with the UAE, where there are problems related to imports of gold, silver, platinum and dates, we don’t want to repeat the same in our talks with, for instance, Oman,” the source said.
The SOPs also talk about being more meticulous while giving concessions taking into account not only the present but future possibilities and risks.
“In one of the FTAs, the partner country started producing and exporting a particular item only after India gave concessions for it without realising the potential risks,” the source pointed out.
Similarly, the risk of third country items, especially Chinese products, coming into India at concessional duties routed through partner countries need to be more seriously addressed.
“Chinese items come into India through countries such as Indonesia and Vietnam taking advantage of the India-ASEAN FTA. This loop hole needs to be plugged through more stringent rules of origin,” the source said.
The SOPs also highlight the need to avoid non-tariff barriers such as sustainability issues, including labour standards and environmental norms, that are pushed by developed nations, and a more balanced approach while dealing with smaller nations, such as Sri Lanka or Bangladesh, to ensure that India gains proportionately.
The Commerce Department had organised a `chintan shivir’ on FTA strategy and SOPs for trade negotiations in May this year where brain storming sessions were held between officials and trade experts including past negotiators.